A Los Angeles Superior Court judge seems to be leaning toward letting a jury hear Jeffrey Gundlach's claim that he was dismissed from TCW Group as chief investment officer so the company could avoid paying more than $500 million in compensation.
Judge Carl West said at a hearing Monday that granting TCW's request for summary judgment — dismissing the claim because there was no dispute of the relevant facts — wasn't warranted. He said a jury would need to determine the terms of Mr. Gundlach's contract with TCW.
Mr. Gundlach, who was terminated by TCW in December 2010, started his own rival firm, DoubleLine Capital, within a matter of days. Several dozen former TCW employees joined the new firm. TCW sued, claiming Mr. Gundlach took company trade secrets with him, prompting the countersuit by Mr. Gundlach seeking hundreds of millions of dollars in back pay.
The judge is expected to issue a formal opinion in the next few days on the summary judgment request.
Attorney Mark Helm, who represents DoubleLine, said in a telephone interview after Monday's hearing that things were looking up. “We are very optimistic that Mr. Gundlach's compensation claim will be brought to a jury in its entirety,” he said.
Susan Estrich, a lawyer representing TCW, said in an interview that summary judgment is rarely granted by state courts. “This is not a major victory,” she said. In a statement issued by TCW, she went further. “The tentative ruling on summary judgment motions changes absolutely nothing in this trial. The evidence of his gross misconduct, violation of his fiduciary duties as an officer and director of TCW and his blatant theft of trade secrets and confidential information is overwhelming.”
In a new wrinkle, the judge is expected to hold a hearing Tuesday afternoon on an amended complaint by TCW adding a new charge that Mr. Gundlach along with several other former TCW employees violated the federal Computer Fraud and Abuse Act by accessing confidential material from TCW computers without authorization.
A trial is scheduled for July 25, but under California law both sides must attempt to negotiate an out-of court settlement beforehand. But sources at both TCW and DoubleLine said the sides are far apart and there is a good possibility that the case could go to trial.